Sam Bankman-Fried’s FTX Scandal Fuels Monetary Relief for CFTC
Due in significant part to enforcement efforts regarding cryptocurrency cases, the US Commodity Futures Trading Commission (CFTC) announced a record-breaking $17.1 billion in monetary relief for fiscal year 2024. The CFTC said on December 5 that the record sum included $14.5 billion in disgorgement and restitution and $2.6 billion in civil monetary penalties (CMP). The agency’s crackdown on the cryptocurrency exchange FTX, which crashed in November 2022, was largely responsible for the rebound.
In the CFTC‘s action against FTX, the exchange, its sister company Alameda Research, and several officials, including founder Sam Bankman-Fried, were accused of fraud. The highest recovery in the agency’s history was achieved through the settlement, which mandated $8.7 billion in restitution and $4 billion in disgorgement. In March, Bankman-Fried received a 25-year prison sentence. The CFTC stated that its FTX lawsuit is still pending.
Romance Scams and Ponzi-Like Schemes: CFTC Cracks Down on Crypto Misconduct
The CFTC obtained $1.35 billion in civil monetary penalties and $150 million from Changpeng Zhao, the founder and former CEO of cryptocurrency exchange Binance, together with other executives, as part of a settlement. Additionally, the court mandated that Binance pay $1.35 billion in disgorgement. The CFTC suggested accusing Stephen Ehrlich, the former CEO of Voyager, of commodities pool fraud and registration violations in addition to other noteworthy crypto instances.
This year, the federal district court denied the former CEO’s motion to dismiss, holding in the CFTC’s favor on numerous significant legal questions,
the CFTC
Seneca Ventures, the defendant, was found to be a fraudulent Ponzi-like scheme involving alleged investments in cryptocurrency, derivatives, and money theft through a carbon offset program. The CFTC also obtained an order granting summary judgment on all counts. A defendant was also accused by the CFTC of using romance scam techniques to illegally embezzle $2.3 million in consumer funds meant for the trade of commodities and digital assets.
The CFTC remains steadfast in its duties to protect customers and vigorously oversee CFTC-regulated markets critical to the health of the US economy. Misconduct in our jurisdictional markets is rarely confined, especially as these boundaries are continually being redefined by disruptive technology.
CFTC Chair Rostin Behnam
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